LED Light Bulbs Mature At Last

About ten years ago I invested in an LED (light emitting diode) company, and [cutting to the chase] we were too early. The technology and the market did not come together as soon as we had expected, our first application win was short-lived, and the venture turned a lot of dollars into dimes. Along the way I heard the pitch about the promise of LEDs many times (usually when more money was needed), including the potential for LED bulbs to replace billions of incandescent (or “Edison”) bulbs sold each year.

Despite this painful experience, it hit me some time this year that LED light bulbs actually have arrived:

They’re available at Home Depot and my local hardware store (and many other places).

They look good — I’ve intermixed them with Edison bulbs in my house, and they are not easy to distinguish, except by the half-second lag between switch movement and the appearance of light.

The economics are now attractive.

A bit more on economics: an Edison bulb (and all other pre-20th century light sources) is essentially a heat source that produces a little bit of light. A “65 Watt” Edison bulb produces about 700 lumens (a lumen, “lm”, is a unit of visible light power). If you had perfect conversion of electricity into light, you would need only 1.0 Watt (“W”) of electrical power to produce 700 lm. So, an Edison bulb is 1.6% efficient. For such a widely deployed technology, this is amazingly bad. But Edison bulbs are much better than the kerosene lamps they replaced …

A comparable LED bulb* consumes 13 W and produces 730 lm, which is 5.2x better efficiency than an Edison bulb, but still only 8%. The theoretical efficiency of an LED is about 30%, but commercially available LED materials are ~16%, and making a light bulb involves a power supply, phosphors, a protective container, etc., all of which dissipate energy.

Why are LEDs better? Edison bulbs function by making a Tungsten filament very hot, and a hot object glows: radiating energy on a broad spectrum of wavelengths, only a small part of which is visible to the eye. The rest of the radiated energy is mostly heat.

LEDs function by driving electrons across a junction between two semiconductor materials in which electrons move at different energy levels. When the electrons cross the junction, they drop from the higher energy level to the lower one, and the energy each electron loses when it drops takes the form of light to a large extent. The color of the light is mathematically determined by the energy level difference. So all of the light produced by an LED is the same color, and LEDs can be designed to produce light in the visible range. This precise conversion to one color is why LEDs are referred to as “digital light”. There is some waste heat caused by inefficiencies within the LED, however, the net result is a big gain in the percentage of electricity converted to visible light.

This digital precision creates a problem, too. Our eyes prefer full-spectrum analog light: what you get from a light bulb, a fireplace, or the sun. LED bulbs use a mix of phosphors (materials that absorb light and re-emit it at different colors) to convert the single color from the LED into multiple colors that mimic the spectrum, imperfectly. I find today’s LED bulb light pleasing, but my wife thinks the same light looks too orange.

LEDs are also long lived because they do not operate at the high temperatures that degrade the filaments of Edison bulbs. The LED itself has an expected life of about 50,000 hours (six years) of continuous use. Its power supply is less robust, so LED bulbs are usually rated for 25,000 hours. How long they last in practice is TBD, however: I have not used any for 25,000 hours. Edison bulbs are good for about 2,000 hours.

Here is how the dollars work out today. This example is for flood lights of the type used in down lights (“cans”), which is most of what we have in our house (pictured above). If you use a 65 W Edison bulb heavily (6 hours per day, 2,200 hours per year), it consumes $21.50/year of electricity (@ $0.15/kWh). The LED bulb uses 80% less electricity and lasts 11 years, so the electricity savings is $17.20 per year, plus a replacement Edison bulb @ $2, resulting in $19.50 of savings. The LED bulb costs $27 at Home Depot. So you get payback in 1.5 years and expect to keep saving for quite a few years beyond that. If the bulb is less used the payback is longer but the ROI is still good.

These savings will not change my lifestyle. But, a good ROI combined with less need to change bulbs and the satisfaction of being “greener” has caused me to stop buying Edison bulbs and install LEDs as bulbs burn out, focusing on the heavily used and hard-to-reach locations.

The easy thing to predict is what will happen, and the hard thing is when. We got the when wrong in 2003, but I have a deep love of innovation, and I’m pleased to see success come along in the end. The lesson here for investors is, when it takes this long and costs this much, the odds for start-ups are not good. The bulbs I am buying come from GE and Philips, the two long time leaders in consumer lighting.

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*Philips 13W, BR30, Soft White, Dimmable LED bulb

I’m an investor with NAV.VC, where I help launch early-stage companies that have new technologies and new takes on how to win in business. I’m inspired every time entrepreneurs prove there’s a better way to solve big problems, make life better or disrupt comfy clubs. I'm ske...